Ten Tips on Transitional Licensing
1. Before you start your application for transitional licensing ensure you:
a) Have a RealMe account as this is the vehicle used to register for transitional licensing
b) You have updated the services you provide on the FSPR to ensure they correctly reflect the advice you are providing. If you need to do this while completing the transitional licensing application the change on the FSPR is not instant and may cause some delays in completing your transitional licensing application.
2. You will need to know how the advice of the FAP will be provided. e.g Number of Financial Advisers and whether there is an element of digital advice. In addition to this, you will have to know whether you are providing advice on behalf of another FAP and whether another FAP will be providing advice on your FAP’s behalf? This question goes to the heart of how you want to structure your advice business.
3. Once you have completed the transitional licensing details On-line (there are 8 pages in total) and clicked the “Pay Button” this will be the action which submits your transitional licence application to the FMA. You will receive a record of all the documents you have submitted and receive a receipt of the payment. It costs $405 (ex GST) to apply for a transitional licence, plus $38.75 (ex GST) per authorised body named on your licence application.
4. If you are an entity becoming a FAP, you will be asked if you will be engaging any Authorised Bodies. An authorised body is an entity named on your licence that can provide the licensed service without needing their own licence. All authorised bodies named on your licence must register on the Financial Service Providers Register as a financial advice provider. You, and the authorised body, are responsible for the authorised body’s conduct, advice and actions, and ensuring they meet all market services licensee obligations. Answering yes to this question will trigger questions about the authorised body you would like to name on your licence.
5. Once you apply for a transitional licence, it should not take more than a week to receive notification of whether it has been approved. All licences approved during the application period will appear on the Financial Service Providers Register from the first day of the new regime. This is when your licence will take effect. If you apply during the application period but your application isn’t processed before the start of the new regime, you will need to wait for approval before you continue providing advice to retail clients, unless you operate under another financial advice provider’s licence. Don’t leave applying for a transitional licence to the last minute.
6. If you have not submitted your transitional licence application before the new regime comes into effect in June 2020, you will have to:
* wait until you have a full licence before providing advice to retail clients, or
* provide advice under another financial advice provider’s transitional or full licence as a financial adviser or nominated representative
* provide advice under another financial advice provider’s transitional or full licence as an authorised body.
7. Unfortunately, you cannot use the fees from the unexpired portion of your current licence towards the transitional licensing fee.
8. The FMA focus is going to be on compliance assurance – in simple terms how do you know your processes are working. Please download the licensing workbooks we have produced to obtain a better understanding of what this looks like.
9. Your Compliance Assurance Programme needs to be fit for purpose and reflect your business structure and size. This does not mean it has to be a novel – it could be a document of 6 or 7 pages. Ensure you understand the duties which are required of you – download the licensing workbooks we have produced to obtain a better understanding of what this looks like.
10. A FAP cannot employ Nominated Representatives during the transitional period. If your business is in growth mode or you know you will have movement with your financial advisers – plan ahead now so you can still adequately service your clients’ needs.